Younger generations are hampered in the homebuying market by debt, but according to The Washington Post, this may be especially true for black millennials. Laurane Simon, member of the National Association of Real Estate Brokers (NAREB), notes that the danger of the slipping black homeownership segment.
“This is exactly the kind of first-time home buyer the industry needs,” Simon says. “We need younger buyers of color to be able to embrace real estate.”
The homeownership gap between black and white homeowners has widened to its largest level in over 50 years, according to the Urban Institute. In a new research report from Urban’s Housing Finance Policy Center, Researchers Jung Hyun Choi, Alanna McCargo, Michael Neal, Laurie Goodman, Caitlin Young, analyze what has caused these disparities.
“African Americans are already being left out of the housing market and that’s exacerbating levels of inequality in this country,” says Lawrence Yun, Chief Economist and SVP of research at the National Association of Realtors (NAR). “There’s a kind of urgency now within the housing community to bring younger African American buyers into real estate.”
Rising student debt is increasingly the biggest hurdle for many black millennials, even compared to their white counterparts. Around 85% of blacks who graduated with bachelor’s degrees in 2016 carry student debt, compared with 69% of whites with bachelor’s degrees, according to the Center for Responsible Lending. Additionally, 38% of all black students who entered college in 2004 had defaulted on their student loans within 12 years, according to the Brookings Institution.
Alanna McCargo, VP, housing finance policy at the Urban Institute, notes that intergenerational wealth is a large reason for this change as minorities are less likely to be homeowners and have less wealth.
“This explains part of the reason for the persistent gap in homeownership across racial and ethnic groups,” McCargo says. “And it’s another reason to sound the alarm for boosting the minority homeownership rate as the best way to build long-term wealth for black households.”